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Charts from The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid -- Chapter 8: The Food Market

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The Food Market The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid http://www.wri.org/thenext4billion

In 17 countries in Africa and Asia, the bottom three BOP income segments account for more than 50% of measured national food spending.

The large size of rural food markets underscores the importance of distribution strategies that can efficiently reach rural BOP households.

The ratio of household food spending between the mid-market segment and the BOP1000 segment is consistent with the finding that the share of food in household spending steadily declines as incomes rise – and does so in all income segments.

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ABSTRACT: Purpose of study: The current research study strives to develop a reliable and valid consumercentric marketing- mix for the core or essential food items at Urban Bottom or Base of the Pyramid market. Design/methodology/approach: This research paper reviews the existing marketing- mix elements of western food market (Product, Price, Place and Promotion). A survey of six hundred households was conducted in six selected slum areas of Delhi. Thereby, based on the exploratory factor analysis existing elements of marketingmix were refined for the essential food items. Findings: Through a survey of 600 respondents residing in six highly dense slum area of Delhi (India), 4 Ps marketing-mix instrument was redefined and empirically tested through exploratory factor analysis. The resultant marketing-mix for BOP segment comprised of four dimensions renamed as Core product, Price Sensitivity, Social sources of information and Place Loyalty. Practical implications: For managers, this research suggests a set of guidelines for designing an efficient marketing-mix for core food items in consumer-sensitive manner. Social Implications: Recommendations will lead to inculcating a long forgotten market in mainstream, economy and improving the standard of their living by providing significant choices. Originality Value: This paper makes an original contribution in direction of revival of existing western marketing-mix based on the BOP consumer survey. Research limitation- The food items consumed by BOP market is further pronged into two categories- Core and Non-core Food items. This study is limited to understanding the purchase behavior for core or essential food items. This study was conducted in six densely populated urban slum areas of Delhi. Paper type: Empirical Research Paper

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Page 1 of 10 To: John Mackey, CEO – Whole Foods Market, Inc. From: Re: Whole Foods Competitive Position and Analysis Date: January 26, 2011 Introduction Whole Foods Market is a multi-national retailer of organic and natural foods. According to the Organic Trade Association (OTA) and Nutrition Business Journal, the organic and natural foods industry’s revenue is currently approximately $26 billion in the U.S.1 and $71 billion worldwide2. The OTA says that the organic and natural food category grew between 15% and 20% each year through 2008 before being stifled by the economic downturn in 2009 with only 5.1% growth3. Similar growth trends are expected for the next few years. With increased competition from more traditional grocers like Kroger and Safeway, as well as supercenters like Wal-Mart and Super Target, is Whole Foods’s fate in jeopardy? Competitive Position Whole Foods’s position in the organic and natural foods sector is dominant. With approximately 33.6% market share in the U.S. in 2010, no other single competitor comes close to the organic food volume of Whole Foods4. Exhibit 1 shows Whole Foods’s revenue and market share from 2003 to 2009. Since 1980, Whole Foods has concentrated on offering the highest variety of organic and natural food products5. With exception of Whole Foods, the organic and natural food market is fragmented with many customer buying channels. Competition exists from direct competitors like The Fresh Market, extended product offerings from traditional grocers and supercenters like Kroger and Wal-Mart, and local farmers’ markets and coops such as those found around Charlottesville, VA. The threat of new entrants is high as more existing food retailers chase the product differentiation and variety of organic foods. Exhibits 2 and 3 show a list of competitors, key figures, and strategies of those competitors. Whole Foods has the advantage of being the first large mover in the organic retail industry. Substitutes in the organic and natural food segment are limited although more food retailers are now offering organic food selections. Whole Foods takes advantage of its above industry average selection with higher prices than most competitors on the hard to find organic products. With few complete channels to buy organics, buyer power is low for those products with limited selection, and high for those organic products being offered in many channels. According to a United States Department of Agriculture (USDA) study, suppliers are limited but are growing to larger regional and national positions6. Unlike the traditional grocers and supercenters, Whole Foods has the advantage of close partnerships with over 2,000 organic suppliers world-wide7. This enables Whole Foods to retain control, get more products year round, and keep prices as low as possible for customers. A complete five forces analysis is found in Exhibit 4. Currently, Whole Foods’s c ...

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